If there’s one relief ordinary people can get from this year’s scorching heat, it’s fewer power cuts. And they’d like to thank China for that. Electricity generation by Indian power plants that run on imported coal nearly doubled in the first three weeks of April compared to a year earlier, as global prices of the polluting fuel fell by about 30%.
This is mainly due to excess supply in China, the world’s biggest producer, which has pushed down global coal prices, making the non-renewable energy source more accessible to Indian power plants. This is timely for India as the country is set to see its highest ever power demand this year, surpassing last year’s record levels.
According to Central Electricity Authority estimates, peak power demand could reach 260 gigawatts by September. “Coal prices have come down last year and power plants in Maharashtra and Gujarat are importing coal amid falling prices,” said Jabal Patel, owner of Gujarat-based coal supplier Giant Asia. About 18,000 tonnes of coal is being lifted every day, he said.
Increase in power generation
Thermal or coal-based power plants generate about 55% of the total power generated in India. Plants based on imported coal produce only about 8% of India’s thermal power generation, but are significant especially in coastal states that are far from domestic coal mines. Power generation plants running on domestic coal are also operating at full capacity due to adequate coal production in the country.
The government had ordered these plants to blend 6% imported coal to ensure power supply, but it was not necessary to do so due to adequate availability of the fuel domestically. Coal ministry data shows that power generation by imported coal-based power plants during April 1-23 rose nearly 90% to 6.51 billion units. In the same period, power generation by power generation companies using domestic coal rose 5.03% to 78.51 billion units.
Between December and February, India’s thermal coal imports rose to 50.6 million tonnes from 36.6 million tonnes in the same period a year ago. Indian power plants that rely on imported coal tend to curtail their operations when prices are high.
Industry officials said the recent drop in coal prices has allowed them to operate at maximum capacity. Moreover, the government has also directed such plants to operate at full capacity to meet power demand in the country.
The price of Australian G4 grade coal with an energy content of 6,300 kilocalories per kilogram (kcal/kg) has fallen 31.7% year-on-year to $129.13 per tonne. Similarly, Indonesian G11 grade coal with an energy content of 4,200 kcal/kg is down 24.3% at $54.52 per tonne, according to market estimates. Data from rating agency Icra showed that India’s thermal coal imports rose 14% to 207.4 million tonnes in the 2023-24 fiscal year.
Adequate supply
Union coal ministry secretary Amrit Lal Meena said coal stocks at power plants in India are at 46.88 million tonnes, sufficient for about 19 days of operations. This is higher than the coal stocks of 33.70 million tonnes available for power plants in the same period a year ago.
“There will be no major shortage of coal stocks and it will be adequate to meet the rising demand as temperatures rise,” Meena told Mint. “Our target is to have at least 40 million tonnes of coal in plants by June 30, and we are well on track to meet that requirement.” The total coal stocks in India currently stand at 154.37 million tonnes, up 29.4% from the 119 million tonnes available in the same period last year.
